Consolidating Africa’s economic gains

The economic performance of Africa in the last few years has been remarkable. The continent has consistently defied the global trend. Five years after the global financial system came perilously close to collapse, the global economic outlook is still uncertain. Yet, in an unexpected twist, average growth in Africa over the last decade has been more than five per cent. Of the 10 fastest-growing global economies, seven are in sub-Saharan Africa. But how will this economic spike be sustained? It is the world’s appetite for Africa’s rich natural resources that, up to now, has been the major driver of this stellar record. And it is this same appetite that will provide both the opportunity and the solution for Africa to sustain these economic achievements. The continent has 12% of the world’s oil reserves, 40% of its gold, and 80% to 90% of its chromium and platinum. Africa is also home to 60% of the world’s underutilised arable land and has vast timber resources. The idea that these abundant natural resources can be the driver for an industrial revolution across the continent is growing. The latest edition of the Economic Report on Africa (ERA 2013) sets out how the continent’s future will be determined by the design and implementation of policies that promote commodity-based industrialization. We believe that such a transformation is both imperative and possible. But it requires courage, vision and a new mind-set from the continent’s business and political leaders.There is no one-size-fits-all solution, but lessons can be learnt from countries such as Malaysia, Indonesia, Thailand and Venezuela.Malaysia is a perfect example of how, in only a few decades, a commodity-based economy was transformed to a high-income and diverse manufacturer, through focused State interventions and an allocation of resources towards the industrial sector. Through a series of 5-year development plans, centred on a vision to transform the structure of the economy, investment was oriented towards industry. Today, Malaysia is a key manufacturer and exporter of a wide range of goods and services.It is clear that governmentshave an important role. A supportive policy and investment framework is critical to attract long-term investors. Policies to build local capacity and address inequality are essential. Developing skills through training and incentives will ensure that local economies are able to grow and diversify. However, a barrier to Africa’s industrialization that is not often talked about is the mind-set of private sector leaders – both in and outside Africa. Many are still indulging in the same historical rent-seeking attitudes that have resulted in the short-term gains of crude, cocoa and gold sales. More business leaders need to change their thinking and understand that short-term revenue gains offer little or no contribution to sustainable economic growth. We are seeing a new style of African business leader emerging – leaders who are building, investing, growing for Africa’s future. Their efforts will provide the jobs and income which will have the biggest impact on tackling poverty and driving social progress. Africa’s private sector must take the lead in improving coordination between farmers, growers, processors, and exporters; in increasing competitiveness in the value chain; and ensuring the price, quality, and standards that market demands are met. We need to support national and regional champions, and help foster collaboration between the public and private sector and the development world. This is the essence of Africapitalism, a private sector led partnership mode focused on Africa’s development. We have already seen real progress on the continent. Ethiopia’s leather industry is developing fast and increasing high-value-added activities. South Africa and Egypt are making similar strides. In Ghana and Zambia, the cocoa and mining sectors have long contributed to socioeconomic growth. In East Africa, the success of Kenya’s fresh vegetable producers in adding value to their exports has been remarkable. But when Africa only sees some 10%of the income from its own coffee crop, we can see that much work still needs to be done. Africa now has the chance, as never before, to shape its own economic future through industrialization. This will help to spread prosperity throughout the continent. An industrialized Africa will also provide a much-needed driver of global growth. It is in everyone’s interest that Africa succeeds.Carlos Lopes is Executive Secretary of United Nations Economic Commission for Africa. Tony O. Elumelu is an entrepreneur, a philanthropist, and the chairman of Heirs Holdings Limited, a pan-African investment company committed to driving economic prosperity and social wealth in Africa. This article was first published on CNN.com